News - Renewable Energy

Renewable heat: The missing link to a low carbon future

21 June 2016

Society is increasingly taking more notice of the electricity we use and the sources it comes from. Renewable generating capacity has increased by 165% since 2010, now supports 460,000 jobs in the UK and provides 19% of our electricity. However, electricity is only part of the energy picture. Senior EIA Consultant Sarah Whyte argues that we need to focus much more on renewable heat as we seek to make the transition to a low carbon economy.

Our energy use is broken down into three main sectors; electricity, transport and heat. And considering all of these, while 19% of electricity from renewables may seem commendable, in the overall makeup this actually equates to only 7% of our total energy consumption. In this context, it is perhaps somewhat surprising that such a major emphasis is placed on electricity, when heat is in fact of much larger significance. In Scotland, energy as heat accounts for approximately 55% of total energy consumption.

While the renewable electricity market struggles to adapt to the recent drastic overhaul of electricity support mechanisms (not to mention managing as best it can the pressure on jobs and the supply chain as the market contracts), it strikes me as a particularly low blow to subject the renewable heat market to similar financial constraints when the technology remains comparatively even less mature.

Introduced initially in 2011 to encourage the deployment of commercial renewable heat technologies, the Renewable Heat Incentive (RHI) was rolled out to include domestic applications in 2014. Under the scheme, the generator receives a payment based on each kilowatt hour of heat produced from a renewable source, with the payment being technology and capacity dependant. This payment is guaranteed by the government for 20 years in the case of commercial applications and for 7 years for domestic uses. Since its introduction, the RHI has facilitated the installation of 1GW of renewable heat. In comparison, renewable electricity generation has an installed capacity of around 7.7GW, providing a clear illustration of the gap in maturity between the two markets.

Only around 4% of our heat demand in Scotland is currently met by renewable heat technologies, leaving us well short of a Scottish Government target to achieve 11% of total heat generation from renewable sources by 2020 and lagging well behind the European average. There seems to be a distinct lack of public awareness of the opportunities renewable heat has to offer. Despite the RHI, Government also seems to lack the drive to utilise renewable heat as a key contributor towards achieving its targets and reducing emissions. There should be no doubting its huge potential as an integral part of the energy mix. Not only could it be used much more extensively to help meet binding energy targets, it also offers a secure and affordable heating option day-to-day. Renewable heat can be proven to help tackle fuel poverty, reduce heating bills and create more efficient local energy systems that also offer local communities multiple economic and social benefits.

Depending on the technology used, renewable heat technologies can currently qualify for RHI payments that, even with potentially high installation costs, can make for an attractive payback and return. However,these rates are now under threat with proposals to make significant cuts. As an example, Biomass faces a potential reduction in support of around 50% and solar thermal would see its support removed altogether. In addition, budget caps will be put in place which, if hit, will trigger further reductions in the level of tariffs available. The proposed cuts threaten to cause extensive damage to a developing industry at a critical time and will likely make it even more difficult for the UK to achieve its own targets for renewables deployment.

The long term aspiration is that renewable heat should be self-sustaining without the need for financial incentives. But the industry has not yet reached that stage and still relies heavily on support through the RHI to make projects viable. Government should learn appropriate lessons from the FiT review and avoid cutting tariffs to the extent that they threaten the longer term viability of the renewable heat industry. Furthermore, the much larger contribution renewable heat can and should be making to the wider energy mix needs to be far better recognised – and much more effort is needed to promote the benefits of these technologies within the industry and amongst the general public. A future where the bulk of our electricity comes from renewable sources but where renewable heat remains a chronically underutilised rarity may be many things – but it won’t be truly low carbon.